C&W Global Forecast 2013-14 by Administrator

GLOBAL OFFICE FORECAST 2013-2014 A Cushman & Wakefield Research Publication

1 Global Overview: Stable in 2013, Better Times Ahead 3 Americas: Bright Pockets in Mixed Forecast 8 Asia Pacific: Primed for Soft Landing 13 Europe: A Bumpy Road

DECEMBER 2012

A Cushman & Wakefield Research Publication

GLOBAL OVERVIEW: STABLE IN 2013, BETTER TIMES AHEAD Real estate at its core is a local business, but there are some clear global themes that can be drawn out of the current market. While there will be variations within and between regions, it is widely anticipated that the global office market will stabilize in 2013 with slow growth being the norm in early 2013. While some markets and regions will experience increased activity later in the year, noteworthy growth is not expected in the majority of locations until 2014 and beyond. The office market is transforming itself, particularly in the more mature markets. While many firms are profitable, they continue to take a hard look at their operational costs, including real estate expenses. Tenants are focused on achieving efficiencies and in many instances this has translated into occupying less space. Where possible, occupiers across all industry sectors will continue to explore new workplace design concepts that enable them to shrink their occupancy footprints. A related trend that is increasingly evident is a flight to quality, resulting in pockets of growth in top quality properties and global gateway cities as rents come under upward pressure. This is typically at the expense of secondary and tertiary space that suffer the ramifications of tenants’ desires to upgrade at little or no extra cost. Many of these properties have become functionally obsolete for today’s office user and will either require significant repositioning to compete or conversion to alternative use. In the Americas, the U.S. office markets will continue to be driven by the technology, energy, and healthcare sectors. Markets that are heavily dependent on the government or financial sectors will witness continued restrained conditions through most of 2013. Canada, which has behaved much like the U.S., should experience slow, steady improvement and gain momentum as 2013 progresses. The development pipeline in Canada, however, is much more robust than that of the U.S., particularly in central Calgary and downtown Toronto. Despite a pullback to more moderate levels of economic growth in Mexico and South America, the office markets in these regions will generally outperform their American and Canadian counterparts. In Europe, the basic building blocks of a resolution to the euro zone crisis are hopefully coming into place, resulting in cautious optimism for the office market and the economy, which should see slow but steady growth returning later in 2013. Some businesses are gradually beginning to move forward with strategic plans, as inertia is no longer an option. While there are pockets of modern space undersupply in markets such as London and Moscow, there

is little speculative development in the pipeline and planned projects are unlikely to move forward without significant pre-let commitments. The European office market will generally see a measured recovery in confidence, rising rents for prime space during the latter half of 2013 as incentives for the best space are gradually scaled back, an appreciable increase in demand in 2014 for primary markets, and a slower stabilization in those markets most affected by the euro zone crisis. With few exceptions, the office markets in Asia will continue along a solid path of growth. Moderate growth is the new norm in terms of the overall economy, and the same may be said for the office market. While demand in some markets like Manila will outpace supply, others such as Kuala Lumpur, Ho Chi Minh and Guangzhou are either currently in, or at risk of, an oversupply situation with significant office completions through 2014. The Asian office market stock is projected to grow by 27% from 2012 to 2014 although the high rent increases of recent years will not be repeated in 2013. Hong Kong’s Greater Central will continue to be challenged with backfilling space vacated by global financial tenants, however, the growing popularity of non-core locations as a lower-cost alternative to Greater Central will sustain tight vacancy and rent increases in markets such as Kowloon. Strong demand from Information Technology (IT)/IT enabled services (ITeS) and Business Process Outsourcing (BPO) firms will benefit markets in India and the Philippines in particular. In general, the global office market in 2013 will play out much like 2012 with slow and steady growth expected for markets that have been underperforming and more stabilization in those that have been overperforming. As the global economy strengthens and businesses and consumers gain confidence, along with significant job creation, by the second half of the year the office occupier market can look forward to slowly improving conditions leading to more robust activity by 2014.

2013 GDP GROWTH FORECAST

AMERICAS

EUROPE

ASIA PACIFIC

SOURCE: CUSHMAN & WAKEFIELD RESEARCH

GLOBAL OFFICE FORECAST 2013-2014

A Cushman & Wakefield Research Publication

TOP-TEN GLOBAL MARKETS AT A GLANCE RENT GROWTH* (2012-2014) Jakarta S達o Paulo San Francisco Shenzhen Manila Bengaluru Calgary Istanbul Shanghai London 0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

ABSORPTION AS PERCENTAGE OF INVENTORY (2012-2014) Shenzhen Chengdu Mumbai Guangzhou Hyderabad Jakarta S達o Paulo New Delhi Pune Chennai 0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

NEW SUPPLY AS PERCENTAGE OF INVENTORY (2012-2014) Chengdu Ho Chi Minh Guangzhou Shenzhen Mumbai Jakarta New Delhi S達o Paolo Hyderabad Pune 0.0%

50.0%

100.0%

* RENT GROWTH IS CUMULATIVE FROM BEGINNING OF Q1 2012 TO END OF Q4 2014.

150.0%

200.0%

250.0%

300.0%

SOURCE: CUSHMAN & WAKEFIELD RESEARCH

DECEMBER 2012

A Cushman & Wakefield Research Publication

AMERICAS: BRIGHT POCKETS IN MIXED FORECAST

Market activity is primarily being driven by a combination of the technology, energy and healthcare industries. These sectors have been leading the recovery and markets such as San Francisco, New York, Boston, Houston, Calgary, Vancouver, Mexico City and S達o Paulo have benefitted. Changes in economic policy will foster growth in Brazil, along with the eagerly anticipated World Cup in 2014 and the Olympics in 2016.

Maria T. Sicola Executive Managing Director, Americas Research

SUPPLY, DEMAND SCENARIO Most markets in the U.S. will see limited new construction from 2013-2014 with the bulk of activity taking place in New York, San Francisco, Washington, DC and Boston, where activity will be largely focused on build-to-suit projects. Seattle has only one project in the pipeline, but a dearth of large blocks of class A space could result in more development by 2014.

Slow and steady, with pockets of surprising success, best characterized the office market activity in 2012 across much of the Americas region. The labored pace of the global economic recovery clearly exerted its influence on the office markets as employment growth remained weak and demand for space followed suit. As a result of ongoing uncertainty, the outlook is mixed within the region. Brazil and Mexico, in particular, will perform strongly in 2013, while a full recovery in the U.S. is not expected until 2014. Canada, which has outperformed expectations, will slow a bit in 2013, but regain solid momentum in 2014.

Conversely, proposed projects in Washington, DC could be placed on hold until tenant commitments are in place due to expected market softening in 2013. Moderate, near-term oversupply will exist in Mexico City, while new construction will slow in S達o Paulo and Buenos Aires. Meanwhile, construction activity will be robust in Santiago in the face of strong economic growth and demand.

ABSORPTION AS A PERCENTAGE OF INVENTORY VS. RENT GROWTH (2012-2014) 70.0% 60.0%

S達o Paulo

Rent Growth

50.0% 40.0% San Francisco

30.0%

Calgary

Boston Houston Seattle Ottawa 10.0% Mexico City Vancouver Chicago Los Angeles Santiago Dallas Washington, DC 0.0% Atlanta Buenos Aires -10.0% Philadelphia 20.0%

Montreal

Toronto

New York

-20.0% -5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Absorption as a Percentage of Inventory

RENT GROWTH IS CUMULATIVE FROM BEGINNING OF Q1 2012 TO END OF Q4 2014.

SOURCE: CUSHMAN & WAKEFIELD RESEARCH

GLOBAL OFFICE FORECAST 2013-2014

A Cushman & Wakefield Research Publication

Canadian central markets have experienced strong business growth and positive absorption over the past few years, driving vacancies to historic lows. Demand softened somewhat in 2012, but most markets continue to see modest growth. Record development announcements were made in 2012, and tight vacancy will continue into 2014 until new space brings relief. Toronto’s building boom entered a new cycle, with over 3.5 msf of downtown office space underway. Vacancy rates vary widely throughout the Americas with single digits seen in most of South America and Canada and the strongest U.S. markets: San Francisco, New York and Houston. Looking forward, absorption in the Americas will remain in positive territory, and demand will steadily improve by the second half of 2013 and into 2014. This will be the case despite transformational changes in occupier strategies aimed at improving efficiencies and decreasing costs. Occupiers are increasingly compressing their space requirements upon renewal, leasing less space per employee, employing open workplace designs and allowing more employees to work remotely. Absorption is expected to be the strongest in the near term in South America and in the U.S. in Boston, San Francisco and Seattle. As we move through the forecast period, increasing demand and shrinking supply will result in upward pressure on rents and a shift from occupier to landlord favorable markets.

IMPACT ON PRICING Prime rents will increase throughout the region in all but a few markets, notably Washington DC, Philadelphia and Atlanta, which will experience softening market conditions. For the balance of markets, the most significant rental growth will take place in 2014, at which time market fundamentals will shift in favor of landlords. Until then, concessions will still be available especially in the first half of 2013 on a market-by-market basis. Markets expected to see sizable gains in class A rents over the forecast horizon include São Paulo, Calgary, San Francisco, New York and Boston.

The most significant rental growth will take place in 2014, at which time market fundamentals will shift in favor of landlords RENTAL RATES

NEW SUPPLY AS A PERCENTAGE OF INVENTORY (2012-2014) Atlanta Boston Chicago Dallas Houston Los Angeles New York Philadelphia San Francisco Seattle Washington, DC Calgary Montreal Ottawa Toronto Vancouver Buenos Aires Mexico City Santiago São Paolo 0.0%

8.0%

16.0%

24.0%

32.0%

40.0%

Supply as Percentage Inventory SOURCE: CUSHMAN & WAKEFIELD RESEARCH

DECEMBER 2012

A Cushman & Wakefield Research Publication

AMERICAS: CLASS A PRIME RENTS 2012

2013

2014

TREND

LOCAL US$D/ LOCAL US$D/ LOCAL US$D/ 2012-2014 CURRENCY SqFt/Yr CURRENCY SqFt/Yr CURRENCY SqFt/Yr

STABLE

DOWN

MARKET OUTLOOK

UNITED STATES Atlanta (US$/SqFt/Yr)

26.69

26.78

26.87

With vacancy rates elevated, class A asking rents remain essentially flat and below the $27.00 psf mark throughout the forecast period. Until demand picks up significantly and available supply is absorbed, rents will experience only modest increases.

Boston (US$/SqFt/Yr)

49.62

51.16

55.95

Dwindling class A options and no speculative construction in the pipeline will result in robust rental growth of 18% throughout the forecast period – the second highest growth rate only to San Francisco.

Chicago (US$/SqFt/Yr)

38.45

38.71

39.11

Cumulative rent growth of 4% is forecast through 2014. With no new construction in the pipeline, demand from tenants vying for the highest quality space will cause upward pressure on rental rates.

Dallas (US$/SqFt/Yr)

24.81

25.50

26.33

Asking rental rates increase by an average annual rate of 2.6%. A slow but steady improvement in demand results in rental growth that slightly outpaces inflation.

Houston (US$/SqFt/Yr)

38.89

40.16

43.30

Annual rental growth will increase throughout the forecast period, reaching nearly 8% by 2014 – a direct result of a supply-constrained market coupled with continued strong job growth.

Los Angeles (US$/SqFt/Yr)

35.74

35.94

36.58

Lackluster demand will keep rents at current levels in the near term. By 2014, asking rent growth averages 1.8%, the largest annual increase since 2008.

New York (US$/SqFt/Yr)

70.08

69.41

75.21

The Midtown South market, with its tech-heavy tenancy, is responsible for much of the rent growth in Manhattan. Expect an annual average growth rate over 11% through the forecast period.

Philadelphia (US$/SqFt/Yr)

26.96

26.77

26.94

Absorption of space in the highest-priced trophy assets continues, leaving class A rental rates essentially flat through 2014. Stronger demand brought on by a healthier economy will result in more substantial increases in rent beyond the forecast period.

San Francisco (US$/SqFt/Yr)

55.35

58.20

62.05

Rent increases are forecast to be the strongest in the country, with a cumulative growth rate of 33% over three years. After two years of extraordinary growth nearing 20% annually, growth rates return to more sustainable levels in 2013 and 2014.

Seattle (US$/SqFt/Yr)

33.11

34.48

37.27

With a decreasing supply of quality space, rental rates will stay on the upswing, keeping investor interest in the region strong. Cumulative growth of 13% is forecast through 2014.

60.00

58.66

59.17

Rental rates contract in 2013 due to an increased supply of vacant space as both private sector and government tenants continue to downsize. Stronger growth does not return until 2015 and beyond.

Calgary (CAD/SqFt/Yr)

48.26

48.70

51.01

51.48

54.47

54.97

With its 28% cumulative growth in rents, Calgary was the highest among Canadian markets. Insufficient supply to satisfy demand keeps market conditions tight, and landlords will respond accordingly with higher rental rates and few concessions.

Montreal (CAD/SqFt/Yr)

40.56

40.94

41.75

42.14

42.94

43.34

Rent growth is modest through 2014, averaging under 3% per year. While demand for prime office space will keep absorption positive, it will not be robust enough to cause significant increases in rental rates in the near term.

Ottawa (CAD/SqFt/Yr)

52.00

52.48

53.84

54.34

56.11

56.63

Rent growth steadily increases, with a 4.2% average annual increase, as tenants begin to see class A options dwindle due to strong positive absorption. Availabilities in new construction may also cause some upward pressure on rents.

Toronto (CAD/SqFt/Yr)

50.73

51.20

51.82

52.30

54.35

54.85

Rents continue on the upswing as available supply tightens. Landlords may be wary of pricing themselves out of the market, but are mindful of rising operating costs and their need to boost margins.

Vancouver (CAD/SqFt/Yr)

53.16

53.65

54.46

54.97

56.32

56.84

Solid rent growth occurs in the tight Vancouver CBD market, ranging between 2.5% and 3.4% over the next two years. Stronger demand beyond the forecast period will put more upward pressure on rents.

Washington, DC

(US$/SqFt/Yr) CANADA

MEXICO/SOUTH AMERICA Buenos Aires (US$/SqM/Mo)

27.55

30.71

27.64

30.82

27.71

30.90

A slowdown in demand causes rental rates to remain essentially flat over the next two years. Vacancy rates returning to single digits (by the end of 2015) will be needed to spur rent growth acceleration.

Mexico City (US$/SqM/Mo)

29.24

32.60

29.76

33.18

30.25

33.72

Rental growth will be relatively strong for prime product in Mexico City, totaling 10% for the 2012-2014 period. Strong demand, particularly from domestic firms, will keep the market healthy and competitive.

Santiago (US$/SqM/Mo)

23.26

25.93

23.83

26.56

24.48

27.29

Rents stabilize in 2012, but begin to post stronger increases in 2013 and 2014. New product deliveries are expected to be absorbed fairly quickly, resulting in little negative impact to rental rates.

140

76.98

158

86.94

181

99.63

The cumulative rent growth forecast of 59% is the second highest in the world (after Jakarta). Increased development, including infrastructure investments, in preparation for the 2014 World Cup support a positive forecast.

São Paulo (R$/SqM/Mo)

SOURCE FOR EXCHANGE RATES FOR AMERICAS: FINANCIAL TIMES | 19 OCT 2012, CLOSING PRICE

GLOBAL OFFICE FORECAST 2013-2014

A Cushman & Wakefield Research Publication

AMERICAS: VACANCY AND ABSORPTION CBD CLASS A VACANCY % 2012

2013

ABSORPTION AS % INVENTORY

TREND 2012-2014

TREND

STABLE

DOWN

MARKET OUTLOOK

2014

2012

2013

2014

Atlanta

21.2 20.4 20.4

1.6

0.9

Expect slow and steady improvement to continue with positive absorption forecast through 2014. Atlanta’s ability to attract business outside of its market makes it an attractive choice for investors.

Boston

10.6 10.6

9.0

1.5

4.2

3.0

After three years in the double digits, the class A vacancy rate will dip below 10% by 2014. Demand from traditional office-using sectors (finance, insurance) and technology companies, particularly in the Financial District and Seaport submarkets, will keep the CBD on an upward trajectory.

Chicago

12.1 11.0 10.1

0.9

1.1

0.9

A steadily improving job market, driven mainly by technology and media, translates into positive absorption throughout the forecast period. Chicago’s West Loop, in particular, will lead the way.

Dallas

20.6 20.0 19.6

-0.3

0.6

0.3

While the growing sectors of energy and technology typically favor the suburbs, the CBD will continue reaping some of the benefits of healthy job growth in the Dallas/Fort Worth area.

4.5

3.6

1.5

0.6

Office market fundamentals will remain strong through 2014. With one of the strongest economies in the country, elevated levels of demand are resulting in a lack of available supply and, accordingly, very little space left to absorb by the end of the forecast period.

20.3 20.0 19.3

-1.3

0.3

0.7

Occupancy rates will inch up slowly by 2014 after four consecutive years of decline. The continuing trend of tenant downsizing will negatively impact the market into 2013.

UNITED STATES

Houston

Los Angeles

6.6

5.1

New York

7.2

8.2

7.4

0.4

0.7

1.0

The office market remains flat in the near-term as softness in the financial services sector offsets growth in the technology sector. Stronger job growth in 2014 will put market fundamentals back on a healthier track.

Philadelphia

9.7

8.9

7.7

-0.4

0.8

1.2

The flight to quality trend shows no signs of letting up. While consolidations and downsizing will have a negative impact into 2013, strong job growth and no new supply will lead to tighter market conditions in 2014 and beyond.

San Francisco

7.6

7.4

7.8

1.1

2.0

1.3

The job market is projected to outperform the rest of the country through 2014. As a result, demand will continue to outpace supply, with healthy absorption rates through the forecast period. The technology sector continues to drive the market.

13.5 11.0 10.0

5.4

2.9

2.3

The office market had a banner year in 2012, with the vacancy rate decreasing by over 500 basis points. Growth will remain robust through 2014, driven mainly by burgeoning technology firms.

Washington, DC 13.8 14.7 13.2

0.3

0.8

2.8

The flight to quality will help keep vacancy rates from increasing even further in 2013, but it will be a challenging year for many properties. Strong job growth, pent-up demand, and more economic certainty will lead to healthy fundamentals in 2014 and beyond.

Seattle

CANADA Calgary

1.1

1.7

1.5

7.3

0.9

3.3

Strong demand for office space eased somewhat in 2012, though supply constraints will ensure that vacancy remains tight through 2014. Though demand is highly sensitive to fluctuations in oil prices, indicators point to a healthy office market for at least the next two years.

Montreal

5.6

5.3

5.2

0.4

0.9

Business confidence continues to drive positive absorption in the Montreal market, though demand is expected to moderate over coming quarters. With very little construction in the pipeline, vacancy rates in Montreal’s central area will tighten slightly through 2014 with steady demand for class A space.

Ottawa

5.4

5.0

7.3

-0.1

0.4

5.1

The flight to quality will continue in 2013 with the class A vacancy rate declining at the expense of lower-quality properties. Stronger demand returns in 2014, but new supply in the downtown core is likely to cause an uptick in vacancies.

Toronto

5.1

7.6

0.1

0.2

0.3

Demand will soften in the near-term due to uncertainty in the global markets, but will pick up slowly through 2014. Vacancy levels will remain flat through 2013 but rise in 2014 as over 1.5 msf of new construction is delivered, offering tenants more quality space in this still-tight market.

Vancouver

2.7

2.8

7.5

0.8

0.9

Strong demand and limited new supply will keep Vancouver's class A market extremely tight in the near term. Sizeable deliveries in 2014, however, provide long-awaited relief and absorption is expected to increase as tenants are finally able to expand.

Buenos Aires

8.3 11.2 10.5

-1.8

5.0

2.1

Demand slumps in the near-term as economic growth slows, but should pick up as uncertainties clear and confidence is restored. Vacancy rates increase in 2013 with the addition of new product, but decrease afterwards due to improving demand.

Mexico City

9.5 15.3 17.6

3.9

3.4

New supply pushes vacancy rates upward, but demand is expected to remain fairly strong with positive absorption throughout the forecast period. While the mix of tenant demand is diverse, financial services firms will remain key drivers.

Santiago

2.1

4.1

MEXICO/SOUTH AMERICA

São Paulo

3.1

3.4

3.5

6.0

Much needed new supply will push the vacancy rate up somewhat through 2014, although it remains extremely tight at 3.4%. Strong economic growth and job additions by both domestic and international firms will continue to fuel demand for Santiago’s prime office buildings.

16.8 14.3

7.7

6.3 10.6 10.2

Vacancy will decline through 2014 as construction slows from recent peaks. While economic growth has slowed, large multinational corporations continue to be drawn to this dynamic city, particularly to its higher-end class A office space.

DECEMBER 2012

A Cushman & Wakefield Research Publication

AMERICAS: CLASS A NEW SUPPLY (000s) 2012 LOCAL MEASURE

2013 LOCAL MEASURE

2014 LOCAL MEASURE

TREND 2012-2014

TREND

STABLE

DOWN

MARKET OUTLOOK

UNITED STATES Atlanta (Sq Feet)

450

Plentiful vacant class A space will keep the pipeline empty through 2013. A mixed-use project, Ponce City Market, with 450,000 sf of speculative office space is underway in Midtown with a 2014 delivery.

Boston (Sq Feet)

1,833

621

All construction projects currently underway are build-to-suits. The pipeline is expected to grow as vacancy rates tighten and tenants' options become more scarce.

Chicago (Sq Feet)

To date, the pipeline for new projects in the CBD is empty. However, 444 West Lake Street may break ground by the end of the forecast period if a large tenant commitment is secured, bringing 900,000 sf of new office space to the CBD in 2016.

Dallas (Sq Feet)

Although office market conditions will improve, ample amounts of class A vacant space keep the stock at current levels for the foreseeable future.

Houston (Sq Feet)

Two buildings were completed in 2011, and are well-leased. The only new development projects in the pipeline are located in the suburbs, mainly in the Katy Freeway submarket, also known as the "Energy Corridor."

Los Angeles (Sq Feet)

With no significant rental rate appreciation and one-fifth of the stock vacant, no new construction is expected to break ground in the CBD through 2014.

New York (Sq Feet)

5,414

916

One and Four World Trade Center, in Downtown Manhattan, comprise 75% of the total sf under construction. Both properties are scheduled for completion at the end of 2013 and, combined, were approximately 50% leased at 3Q 2012.

Philadelphia (Sq Feet)

San Francisco (Sq Feet)

770

342

Seattle (Sq Feet)

118

371

983

279

New construction projects in the core markets are garnering strong demand, while those in the non-core markets are struggling. As the market will likely remain soft in 2013, several proposed projects in the pipeline will require significant tenant commitments before moving forward.

1,986

473

1,039

Projects delivered in 2012 were fully leased before coming to market, while those in the pipeline are garnering strong tenant interest. Buildings being vacated by tenants flocking to new construction will need to be retrofitted in order to compete with these high-quality projects.

Montreal (Sq Feet)

230

Very little new construction will add to Montreal's office stock over the next two years and existing supply will slowly be absorbed. There are two projects underway that will see about 745,000 sf of office inventory come to market by the end of 2015. The Deloitte Tower, a 514,000-sf structure is about one third preleased.

Ottawa (Sq Feet)

839

The market will remain relatively tight through 2013, and 2014 will bring about 840,000 sf, which is already 75% preleased, to the downtown market.

Toronto (Sq Feet)

100

1,585

147

818

Large blocks of space continue to be in short supply in Downtown Vancouver. The 1.6 million sf of projects currently under construction will help alleviate some pent-up demand.

129

1,389

194

New construction will continue to be driven by large multi-national corporations seeking specific real estate needs that existing product cannot satisfy.

126

1,360

309

3,325

191

2,056

Of the four largest projects in the pipeline in the CBD, only two have secured anchor tenants. However, the flight to quality persists and tenants seeking efficiencies along with higher visibility will continue to be drawn to new developments.

Santiago (Sq Meter)

759

1,044

130

1,399

Demand will keep pace with new supply as tenants' appetite for new construction continues. As is the case in other Latin American markets, large multi-national corporations seeking efficiencies and technologically-savvy properties are leading the charge to new development.

S達o Paulo (Sq Meter)

412

4,433

263

2,833

118

1,273

The surge of new construction over the last several years will slow in 2013 and 2014, although it will be absorbed in short order as demand for space in these new projects is robust.

Washington, DC (Sq Feet)

Philadelphia has not had an addition to its downtown office stock since 2007. Rental rates have plenty of room to grow before new construction becomes viable. Construction projects are ramping up to help relieve some of the pent-up demand. While only one new speculative project is currently underway, several buildings are undergoing renovations and more proposed projects are expected to move forward by the end of the forecast period. Only one speculative project is in the pipeline, but a dwindling supply of large blocks of quality space along with rising rental rates could push a new wave of development by 2014.

CANADA Calgary (Sq Feet)

Vancouver (Sq Feet)

While demand has recently begun to ease in Downtown Toronto, interest in newly announced office towers is strong. Approximately 3.9 million sf of new developments have been announced to rise between 2014 and 2017. This market has been driven by the health of the banking sector.

MEXICO/SOUTH AMERICA Buenos Aires (Sq Meter) Mexico City (Sq Meter)

DECEMBER 2012

A Cushman & Wakefield Research Publication

ASIA PACIFIC: PRIMED FOR SOFT LANDING

Of course there are major risks, including the inability to reach a solution to the EU debt crisis, continued sluggish U.S. growth, and long-standing territorial issues that have recently eroded Japanâ&#x20AC;&#x2122;s ties with China and South Korea. Fortunately, most of the economies involved have the latitude to apply appropriate fiscal and monetary policy responses to counter any stress, especially with inflationary pressures generally expected to ease further in 2013.

Sigrid Zialcita Managing Director, Research, Asia Pacific

STEADY BUT UNEVEN LEASING

SLOWER, SUSTAINED GROWTH

The economic momentum remains sufficient to strengthen employment, and in turn, sustain momentum in the property markets. The outsourcing industry was an important growth pillar in 2012 and will continue to thrive into 2013 as demand for outsourced services persists in key cities in India and the Philippines.

Signs of improvement proliferated across the region as 2012 drew to a close, indicating that economic growth is unlikely to slow further in this cycle. But nor will it return to the heady rates of 2010, with regional GDP growth likely to settle once again around 5.0%-5.5% in 2013. The global economic outlook remains tenuous, and will provide a challenging backdrop especially for exports, a principal engine of growth.

For China, growth will come from emerging sectors such as environmental protection and modern energy, professional services, information technology, and medical and financial services, as laid out in the countryâ&#x20AC;&#x2122;s 12th Five-Year Plan, which aims to accelerate the incubation and development of strategic industries. Continued strides to remove economic barriers across the region will also encourage growth. However, macro-volatility, combined with regulatory restraints, will weigh heavily on the financial sector and fuel further consolidation. The impact is likely to be less pronounced elsewhere in the region where rising wealth will enhance the funding positions of banks. The commodities downturn also portends a new phase of growth for the mining and metals sector in Australia and Indonesia.

Additionally, China is ushering in a period of lower growth for the medium term as it attempts to rebalance its economy toward consumption. Such a downshift will detract from regional growth, as China now exerts greater influence on the region as a major importer and investor. Nonetheless, those economies that are able to rely on domestic demand, particularly in Southeast Asia, will outperform those that are heavily export-oriented. India is also set to rebound thanks to a variety of policy reforms aimed at boosting investments.

ABSORPTION AS A PERCENTAGE OF INVENTORY VS. RENT GROWTH (2012-2014) Jakarta

80.0%

Rent Growth

60.0%

40.0%

Manila Bengaluru Shanghai

20.0% Beijing

Perth

Tokyo

0.0%

Brisbane

-20.0% -10.0%

Bangkok Melbourne Taipei Sydney Seoul Kuala Lumpur

Hyderabad

Chennai Pune

Guangzhou New Dehli

Mumbai Chengdu

Singapore

Hong Kong 0.0%

Shenzen Ho Chi Minh

10.0%

20.0%

30.0%

40.0%

50.0%

Absorption as a Percentage of Inventory RENT GROWTH IS CUMULATIVE FROM BEGINNING OF Q1 2012 TO END OF Q4 2014.

SOURCE: CUSHMAN & WAKEFIELD RESEARCH

GLOBAL OFFICE FORECAST 2013-2014

A Cushman & Wakefield Research Publication

SOLID OFFICE FUNDAMENTALS The outlook generally calls for continued low vacancies and moderate rent increases in the region, with the exception of supply-heavy markets, against a backdrop of sustained healthy demand among a broad spectrum of office users. However, demand gains will be lower relative to 2012, as tenants “right size” their footprint by both rationalizing location requirements (core versus non-core) and enhancing space efficiency to control costs. Still, occupancies will generally remain high in a number of markets tracked, with tenants continuing to face supply constraints in some CBD markets such as Brisbane, Manila, and Perth, where a paucity of new supply will cause grade A vacancies to dip below 5.0%. In Hyderabad and Tokyo, a steady take-up should absorb over three million square feet (msf) slated for delivery in each market next year, and sustain ultra-low grade A vacancies. The completion of new CBD projects in Beijing, Melbourne, Shanghai, Sydney, Jakarta and Taipei in 2013 will provide some companies seeking top-tier space a chance to expand; however, occupiers will pay a premium with vacancy around 10% or lower in those markets. Meanwhile, a supply build up in Kuala Lumpur, Guangzhou, Pune, Chengdu and Ho Chi Minh will push up premium vacancies to about 20% or higher and strengthen tenant leverage. However, rental rates in Indian cities are expected to continue their uptrend, largely reflecting higher service charges. In Bengaluru, the completion of over seven msf will push grade A vacancies to

an all-time high, but this is likely to be temporary with stronger absorption and sustained construction declines expected in 2014. Across the region, occupiers with three-year leases coming due will likely face sharp renewal-rate increases, as grade A rents will be up by an average of nearly 15% from 2010. Exceptions will include CBD rents in Singapore, which should bottom out after declining since the fourth quarter of 2011; consequently, lease renewals will fetch lower rates compared to 2010. In Hong Kong’s Greater Central, slightly higher vacancies will continue to erode rents in 2013 – offering some relief to tenants paying top rents – with renewal rates expected to be down by 17% from 2010 rents. Nonetheless, Hong Kong’s Greater Central is likely to keep its mantle in 2013 as the region’s most expensive market. The two-year consecutive decline in effective rents in Ho Chi Minh due to significant supply will also lead to lower renewal rates in that market. In Seoul’s CBD (excluding Gangnam and Yeouido districts), while concession packages have moderated through the third quarter of 2012, effective rates are expected to remain below those in 2010. On the investment front, the region will continue to be prized for its solid property fundamentals, improved liquidity and increased availability of low financing options; all of which are set to fuel stronger sales activity and, in turn, rising office values in the region. While global gateway economies have typically been the investment choice destination for office properties, growth markets offer significant opportunities with their competitive excess returns.

NEW SUPPLY AS A PERCENTAGE OF INVENTORY (2012-2014) Bengaluru Bangkok Beijing Brisbane Chengdu Chennai Guangzhou Ho Chi Minh Hong Kong Hyderabad Jakarta Kuala Lumpur Manila Melbourne Mumbai New Delhi Perth Pune Seoul Shanghai Shenzhen Singapore Sydney Taipei Tokyo 0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

300.0%

Supply as Percentage Inventory

SOURCE: CUSHMAN & WAKEFIELD RESEARCH

DECEMBER 2012

A Cushman & Wakefield Research Publication

ASIA PACIFIC: CLASS A/PRIME RENTS 2012

2013

2014

TREND

LOCAL US$D/ LOCAL US$D/ LOCAL US$D/ 2012-2014 CURRENCY SqFt/Yr CURRENCY SqFt/Yr CURRENCY SqFt/Yr

TREND

STABLE

DOWN

MARKET OUTLOOK

SOUTHEAST ASIA PACIFIC Singapore (SPD/SqFt/Mo)

8.99

88.35

9.20

90.43

8.88

87.25

Higher vacancy and additional supply coming in 2013 could exert downward pressure on rents next year. Rents are likely to remain flat or rise moderately should business sentiment improve next year.

Manila (PHP/SqM/Mo)

837

22.55

906

24.39

971

26.15

With healthy demand from BPO (outsourcing) companies, moderate supply and growing vacancies, we expect that rents would go up and remain elevated over the next couple of years.

Kuala Lumpur (M YR/SqF/Mo)

7.40

29.11

7.28

28.64

7.05

27.73

Upcoming supply by 4Q 2012 and 2013 is likely to add downward pressure on rentals in the KL CBD market, which is already dealing with oversupply conditions.

281,445

32.71

323,662

37.62

356,028

41.38

Rental rates are projected to increase further in line with continuing strong demand for office space. Highest increment is still expected to occur in grade A offices.

49.17

54.82

46.98

52.38

44.53

49.64

Rents are likely to decrease further in 2013-14 due to the high volume of supply expected to be completed and high vacancy rates prevailing in the market.

Bangkok (THB/SqM/Mo)

736

26.69

750

27.23

765

27.77

Rental rates are expected to be slightly increasing in line with decreasing vacancy. New renovations and recent new supply are the main factors of rising rents.

Brisbane (AUD/SqM/Yr)

695

66.78

700

67.27

710

68.23

We predict Brisbane rents to continue to rise marginally over the next few years. However, if its economy can retain its current high growth level, vacancy will tighten and rents will increase.

Melbourne (AUD/SqM/Yr)

505

48.53

515

49.49

525

50.45

Melbourneâ&#x20AC;&#x2122;s rental rates will continue to increase at about the CPI rate in the coming years. Low sentiment and muted supply will keep rates from growing exponentially.

Perth (AUD/SqM/Yr)

810

77.84

820

78.80

830

79.76

Like Brisbane, we expect steady growth in rental rates but if the mining boom continues, rental rates could skyrocket due to little vacancy and limited development pipeline.

Sydney (AUD/SqM/Yr)

855

82.16

865

83.12

870

83.60

Rental rates in Sydney are expected to increase marginally in 2013. This is the general trend for Sydney where most of the net rental fluctuations come in the form of tenant incentives.

Guangzhou (RMB/SqM/Mo)

268

47.81

278

49.61

290

51.77

Owing to large volumes of new supply and high vacancy rates, rents are expected to remain stable while the growth will continue to slow down over the next two years.

Hong Kong (HK$/SqFt/Mo)

105

163

98.04

152

103

159

Shanghai (RMB/SqM/Mo)

486

86.66

534

95.11

559

99.60

Beijing (RMB/SqM/Mo)

573

102

584

104

588

105

Shenzhen (RMB/SqM/Mo)

334

59.63

365

65.10

402

71.59

Rental growth is expected to be steady in 2013-2014, but it may slow down in 2015 and beyond. Overall, it will remain high, even with the owner/occupied share taken into account.

Chengdu (RMB/SqM/Mo)

186

33.15

187

33.26

185

33.01

Owing to high volumes of supply and elevated vacancy rates, rent is unlikely to grow during the next two to three years. Upward pressure could be seen when oversupply starts to abate in 2015.

Tokyo (JPY/tsubo/Mo)

25,100

107

25,935

110

26,880

114

Seoul (KRW/SqM/Mo)

37,057

37.44

36,784

37.17

38,500

38.90

Rents in Seoulâ&#x20AC;&#x2122;s grade A office market will increase because of newly-completed buildings and inflation rate. However, with new supply entering the CBD market, effective rents are expected to continue to show a weakening trend.

4,788

55.20

4,837

55.77

4,876

56.22

Due to the balanced new supply and demand growth, it is expected there will be a stable rental growth in grade A office at about 2% -3% by 2014.

Bengaluru (INR/SqFt/Mo)

107

23.79

112

25.00

118

26.20

Rental rates are set to see a gradual uptrend over the next few years, given the rising preference for grade A properties by the occupiers.

Hyderabad (INR/SqFt/Mo)

48.50

10.81

50.93

11.35

53.38

11.90

Rents will increase marginally over the next several quarters due to the increase in demand of quality grade A space in the suburban micromarket.

New Delhi (INR/SqFt/Mo)

412

91.84

421

93.94

433

96.50

Rents will increase marginally over the next two years in the CBD due to lack of supply and scarcity of space. In Gurgaon and Noida, the demand for good quality office space is expected to rise during the same time frame pushing rentals upward.

Mumbai (INR/SqFt/Mo)

293

65.38

309

68.81

325

72.53

High vacancy levels and the large upcoming supply will exert downward pressure on rentals. However, demand for quality space is expected to remain healthy, which would keep rental rates stable over the medium term. Rentals are expected to grow moderately in CBD, SBD.

Chennai (INR/SqFt/Mo)

81.00

18.06

82.46

18.38

85.94

19.16

Large-scale upcoming supply in 2013 and healthy demand will keep rental rates stable in 2013. Continued positive absorption and reduction in supply will move rent upward in 2014 and beyond.

Pune (INR/SqFt/Mo)

80.00

17.83

82.29

18.34

84.59

18.85

Rentals are likely to remain stable in the upcoming period of 2013-14 due to moderate demand and supply conditions across the micro markets of the CBD and off-CBD.

Jakarta (Rp/SqM/Mo) Ho Chi Minh City (USD/SqM/Mo)

EAST ASIA

Taipei (NT$/ping/Mo)

Rents will come under added pressure in 2013 due to heightened vacancy in some prime CBD buildings. As rents dip below HK$100 psf the rate of decline is expected to moderate. Limited supply in 2013 and 2014 will contribute to sustained rental growth. However, as a result of economic uncertainty, rents are likely to increase at a slower pace than in previous periods. Rental levels are unlikely to see a sustained increase in the next several quarters, as demand in key submarkets is cooling down due to elevated rents.

Rents in 2013-14 will increase gradually as vacancies move up and demand remains stable. Peak rentals are likely by 2016-17 as vacancy decreases further beyond 2015-16.

INDIA

SOURCE FOR EXCHANGE RATES FOR ASIA PACIFIC: FINANCIAL TIMES | 19 OCT 2012, CLOSING PRICE

GLOBAL OFFICE FORECAST 2013-2014

A Cushman & Wakefield Research Publication

ASIA PACIFIC: VACANCY AND ABSORPTION CBD CLASS A VACANCY %

ABSORPTION AS % INVENTORY

TREND 2012-2014

TREND

STABLE

DOWN

MARKET OUTLOOK

2012 2013 2014 2012 2013 2014 SOUTHEAST ASIA PACIFIC Singapore

6.6

6.2

5.4

7.1

3.8

3.7

Vacancy rates are expected to decrease moderately over the next two years as supply remains low. Moderate demand for office space is expected due to problems in the euro zone and risks of global economic slowdown.

Manila

5.5

4.3

2.6

4.1

2.5

2.2

Stable demand from BPO companies for prime office spaces will continue to drive office vacancies downward for the next two- to-three years. Demand exceeds supply at least until 2014-15.

Kuala Lumpur

22.3

19.7

20.0

4.2

4.1

4.2

The existing oversupply scenario in KL CBD is expected to carry forward for the next six-to-nine month period, while KL Fringe will face higher vacancy rates over the next two to three years with significant new supply coming to the market.

Jakarta

8.9

9.5

11.9

10.2

10.9

12.6

Ho Chi Minh City

12.1

30.7

42.0

13.1

11.1

9.3

The expected supply over the next two years may not support market recovery given demand expectations. Vacancies are likely to remain elevated in the mid to long term.

Bangkok

16.4

15.7

14.9

7.3

0.8

0.7

With no grade A supply for the next two years, CBD absorption is expected to hold up at a moderate level, and the vacancy rate is likely to decrease during 2012-2014 accordingly.

Brisbane

3.4

3.7

2.3

5.3

2.2

1.4

Vacancy will remain low in Brisbane due to solid absorption and low supply. There are some new buildings with development approval, but they will need pre-commitments to get off the ground.

Melbourne

3.9

7.4

6.8

3.1

5.4

2.5

Despite the lower sentiment in Melbourne at present, we expect it to continue its high absorption trend. The vacancy rate will jump in 2013 due to absorption not meeting supply, but will trend downwards from 2014.

Perth

4.0

4.6

4.3

2.6

2.2

2.6

Vacancy will contract with solid absorption expected due to the strong economic climate and very little new supply in the development pipeline.

Sydney

7.5

8.8

7.8

3.8

3.1

2.6

Net absorption is expected to keep in line with supply in the coming years. Vacancy will remain at 7% -8% and owners will consider withdrawing space from the market for refurbishment if the vacancy factor gets too high.

Guangzhou

19.0

22.0

20.0

13.2

14.9

12.2

Due to a large scale new supply expected in the next two years, the office market is likely to see elevated vacancy rates.

Hong Kong

6.8

7.3

6.9

-1.3

-0.2

1.4

The lull in demand for prime CBD office space is likely to persist over the coming year, causing slightly elevated vacancy.

Shanghai

7.0

8.0

9.3

7.2

3.5

4.8

Rise in demand from both local companies and multi-national corporations will continue to absorb high-quality office premises within the city. Vacancies will go up with supply exceeding the demand.

Beijing

5.6

6.7

6.8

-0.8

2.9

2.3

Absorption is expected to remain stable due to the limited amount of supply expected within the next two years.

Shenzhen

11.0

14.0

12.0

20.0

12.3

21.2

Although it seems that new supply in the coming years will reach a high level, vacancy will be relatively stable in 2013-2014 as some of the buildings under construction could be occupied by owners.

Chengdu

38.5

39.8

39.9

21.1

17.1

16.7

The vacancy rate, which will gradually increase and remain high during next two to three years, is expected to peak in 2014, but then fall slightly afterwards.

Tokyo

5.7

5.2

4.6

3.1

1.3

1.5

Vacancy rates are likely to decrease gradually until 2014 as absorption exceeds supply. Beyond that it will decrease further with moderate supply and stable demand in the market.

Seoul

13.9

14.4

15.6

6.3

4.5

4.7

The vacancy rate in the CBD area is forecasted to increase for the coming years until some of the excess supply is absorbed. Leasing transactions involving upgrading from lower grade to new prime office buildings are expected to increase.

Taipei

9.9

10.4

9.2

5.3

5.4

5.7

Due to the execution of Economic Cooperation Framework Agreement and the improved cross-strait relationship, it is believed that the future absorption will increase continuously.

Bengaluru

17.9

19.6

17.2

3.9

4.6

6.1

Absorption is expected to increase gradually over the next two to three years. With considerable supply entering the market, vacancy is expected to rise next year. However, with stable demand expected and gradual reduction in supply, vacancy is likely to go down starting from 2014.

Hyderabad

3.3

2.4

2.9

9.9

12.5

12.6

Absorption is expected to increase for the next two years due to continued demand for quality grade A space in the suburban micromarket. More pre-commitments are likely in 2013-14 and vacancy is expected to remain low in the mid- to long term.

New Delhi

27.6

27.8

23.9

7.6

8.8

10.7

Absorption is expected to remain healthy in the next two years due to the expected increase in the demand for office space that will be met by the upcoming supply in 2013 and 2014.

Mumbai

16.1

11.8

6.7

19.5

5.7

18.2

In CBD, SBD - the majority of the current vacant space, upcoming supply over the next two years is likely to get absorbed thereby reducing the vacancy levels.Vacancy in other submarkets is likely to remain elevated in the medium term due to large supply; nevertheless absorption is also expected to remain healthy with improved economic prospects.

Chennai

16.0

15.5

9.7

6.9

7.4

8.6

Despite healthy absorption, vacancy is expected to remain almost the same next year due to substantial anticipated supply. However, vacancy is expected to drop by 2014 propelled by a reduction in supply.

Pune

21.0

27.6

21.3

7.8

7.5

8.5

High infusion of supply over the next two years with moderate demand is likely to shoot up the vacancy levels in CBD, Off CBD next year. Stable growth in demand and reduction in supply are likely to reduce the vacancy levels starting in 2014.

Most of the upcoming new office projects that will enter in 2013 secured high pre-commitments during construction. Absorption and vacancy will gradually increase towards 2014.

EAST ASIA

INDIA

DECEMBER 2012

A Cushman & Wakefield Research Publication

ASIA PACIFIC: CLASS A NEW SUPPLY (000s) 2012 LOCAL MEASURE

2013 LOCAL MEASURE

2014 LOCAL MEASURE

TREND 2012-2014

TREND

STABLE

DOWN

MARKET OUTLOOK

SOUTHEAST ASIA PACIFIC Singapore (Sq Feet) Manila (Sq Meter)

1,388

808

700

While nearly three msf of supply is expected in CBD markets during 2012-14, growth is expected to moderate the next two years and then gain momentum in 2015.

243

2,613

904

344

With several project completions in the Makati and Fort Bonifacio area, supply reached nearly two msf in 2012 and could moderate in 2013-14. Most of the new supply is designed to accommodate the BPO industry, which is driving the market.

681

2,129

Supply is likely to increase moderately in 2013 in the KL CBD area, and a drastic increase in 2014 is expected.

Kuala Lumpur 2,686 2,686 (Sq Feet) Jakarta 259 2,786 (Sq Feet) Ho Chi Minh City 19 203 (Sq Meter) Bangkok 0 0 (Sq Meter)

350 3,763 91

554 5,959

983

604

Higher amounts of supply are expected in the next two years and most of it is high-quality grade A space. Upcoming supply in 2013 and 2014 will substantially increase the total stock; future projects could be put on hold or delayed over the next two years.

After more than one msf of new supply was added last year, no new supply is expected in the next one to two years.

Brisbane (Sq Meter)

421

229

With only one building currently under construction (due in 2013), vacancy will contract sharply if current absorption levels in Brisbane continue. Large space users will have to consider pre-committing to one of the many developments in the pipeline, which have been mooted until they can pre-commit tenants.

Melbourne (Sq Meter)

590

193

2,078

478

A substantial amount of space will be completed in 2013. Beyond that, there are plenty of approved buildings awaiting tenant pre-commitments before construction commencement.

Perth (Sq Meter)

241

217

There was a large amount of new supply in 2012, but this has all been absorbed. The supply pipeline is solely comprised of approved but mooted buildings. If absorption continues at the current levels, vacancy will become non-existent and new space cannot be added until another building completes the construction process.

Sydney (Sq Meter)

591

118

1,274

668

Sydney has two new buildings to be completed next year. The majority has been pre-leased and the spaces being vacated by tenants are expected to be withdrawn from the market for major refurbishment.

Guangzhou (Sq Meter)

650

7,002

774

8,336

526

5,661

Hong Kong (Sq Feet)

165

595

6,406

342

3,684

503

5,417

EAST ASIA

Shanghai (Sq Meter) Beijing (Sq Meter)

165 1,777

329 3,541

200 2,153

Guangzhouâ&#x20AC;&#x2122;s grade A new completions will peak at 0.77 million sq.m in 2013, with 93% situated in the PRNC submarket. With overall slow demand, the completion of several small projects over the next 12 months will place slight upward pressure on vacancy. The next two years is set to see approximately 850,000 sq.m of new supply. As there is limited developable land in central Shanghai, new projects are for the most part being delivered to Hongqiao and LJZ submarkets Expect limited supply to 2014, with large supply possibly coming into the market only after 2016.

Shenzhen (Sq Meter)

316

3,406

364

3,918

608

6,543

There will be about 2.8 million sq.m of grade A office space coming onto the market in 2013-2017, but around 60% of the new space under construction will be owner-occupied.

Chengdu (Sq Meter)

678

7,302

647

6,969

834

8,979

Chengdu will see an intensive amount of new supply in the next two years due to large numbers of office completions in the emerging submarket of Nanyanxian.

Tokyo (Tsubo)

231

8,214

3,347

109

3,873

As compared to 2011 and 2012, new supply will slow down over the next couple of years. After a temporary drop in 2013-14, the supply is expected to grow at a constant rate until 2016.

Seoul (Sq Meter)

494

5,321

316

3,399

401

4,315

Approximately 1.3 million sq.m of new office space will be added to the market until 2016. Overall supply is expected to exceed demand; creating a tenantsâ&#x20AC;&#x2122; market for the next two years.

524

415

8,432

7,485

4,640

Supply will remain high over the next two years, with the majority being concentrated in peripheral locations of Outer Ring Road due to its good connectivity and better proximity to the central and suburban areas.

Hyderabad (Sq Feet)

890

3,065

3,945

Scarcity of grade A space, low vacancy rates for the last couple of years, and pre-commitments in 2011-12 should boost construction activity over the next two to three years. Some delayed projects are gearing up for completion by 2013-14.

New Delhi (Sq Feet)

9,359

7,805

6,571

Supply is expected to gradually increase during 2013 and 2014 with the expected completion of several under construction projects in the micro markets of Gurgaon and Noida.

Mumbai (Sq Feet)

2,249

150

1,500

With no land available in South Mumbai, the CBD is not expected to see any new commercial development in the near future. SBD saw 2.2 msf of new supply in 2012, and about 1.5 msf of grade A supply is expected to be delivered in 2014.

Chennai (Sq Feet)

2,003

3,523

1,516

The supply is expected to be on higher side due to a number of larger developments that were deferred in 2012 and will come to market in 2013. It will normalize thereafter.

Pune (Sq Feet)

357

1,950

350

Taipei (Sq Feet)

After the drought of new supply in the past two years, there will be three new grade A office buildings (with total floor area of nearly one msf) completed in 2013-14.

INDIA Bengaluru (Sq Feet)

High-quality supply infusion in CBD and off-CBD locations is likely to maintain momentum until 2014. As they attain saturation, suburban and peripheral locations are expected to see maximum construction.

GLOBAL OFFICE FORECAST 2013-2014

A Cushman & Wakefield Research Publication

EUROPE: A BUMPY ROAD

debt problems. A â&#x20AC;&#x153;muddle-throughâ&#x20AC;? scenario rather than a euro zone breakup now appears more likely, and more beneficial to an early return of corporate confidence and property market activity.

A FEW BRIGHT SPOTS From a landlord and developer perspective, one positive trend has been that quality supply constraints are now more of an issue in some markets. Despite a continuing high level of cost sensitivity, this factor will be first to drive rental growth as occupiers look to upgrade. With a clear focus on grade A offices at the expense of secondary, the market is expected to remain polarized as 2013 progresses. However, patterns of performance will vary across Europe from market to market as occupiers react to the shortage of prime space, often alongside secondary space oversupply and higher rental pricing. London will lead the way, followed by strong performances in the west from Frankfurt, Munich, Luxembourg and Dublin (where no new space is due until 2014) and in the east from Istanbul and Moscow. Locations in the midst of the euro zone crisis such as Milan, Madrid and Barcelona are likely to see further falls before they start to stabilize in 2014.

David Hutchings Partner, Head of the European Research Group The European office market was on a bumpy road for much of 2012 and while there are now some signs of smoother times ahead, they are still mixed. Not surprisingly, the projection for the market over the next 24 months is for slow growth at best, with further challenges and falls for weaker and some second-tier markets. On a positive note, the overall vacancy rate should decline as construction remains slow with all but a handful of markets including Milan, Warsaw and Madrid seeing lower levels of completions in 2012 than 2011. Indeed, some pockets of quality undersupply are already emerging, supporting mild positive rental growth. What is more, while the outlook for the European economy is uncertain and clearly less robust than we would like, many now believe the euro zone is heading into a stronger position following more decisive measures being proposed to deal with its

The advantage occupiers enjoy may start to erode quite quickly as the amount of quality space diminishes, coupled with low levels of development completions, in most key cities across Europe.

ABSORPTION AS A PERCENTAGE OF INVENTORY VS. RENT GROWTH (2012-2014) 30.0% 25.0%

Istanbul London

Rent Growth

20.0%

Luxembourg Dublin

15.0% 10.0%

Munich

5.0%

Paris

Lisbon 0.0%

Zurich

Brussels Frankfurt Budapest Stockholm

Bucharest

Moscow

Warsaw

Amsterdam

-5.0% Barcelona

Madrid

Milan

Prague

-10.0% -5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Absorption as a Percentage of Inventory RENT GROWTH IS CUMULATIVE FROM BEGINNING OF Q1 2012 TO END OF Q4 2014.

SOURCE: CUSHMAN & WAKEFIELD RESEARCH

DECEMBER 2012

A Cushman & Wakefield Research Publication

Unlocking development capital however, will remain a challenge as lenders, who in the past may have been overexposed to real estate, are now typically requiring full or partial pre-lets before committing funding, especially for projects of any significant size. Despite the scaling back of development, the vacancy rate has not declined notably and, while it will trend downwards across 2013 and 2014, the lows of 2007 are still some way off.

AN UPHILL WALK The onset of more robust and sustainable levels of take-up activity across Europe are likely to be further delayed as occupiers generally remain preoccupied with cost savings and risk avoidance in a sluggish European economy. This is underlined by an 11.4% unemployment rate in the euro zone that is expected to drift higher in the short term, with variations by sector and region. Areas with high unemployment are of course adding to calls for an easing in fiscal retrenchment and the pursuit of growth and job creation strategies â&#x20AC;&#x201C; and this may lead to a let up in the pace of austerity and to action promoting growth in areas such as technology, new media, sustainable energy and infrastructure.

continue to postpone decisions for as long as possible. However, while replacement of space is very much a key trend, some occupiers are considering expansion as well as upgrading as part of their corporate strategies, either to defend or build market share, and more will be ready to make a move when they see sustained growth coming in to place. Absorption across Europe is expected to be positive in 2013, rising on an annual basis from 2012 and across the forecast period. Cities with a diverse occupier base and those with better macro-economic growth potential, such as Brussels, Moscow, Paris and Istanbul, will fare best, while a steady reappraisal of the better areas of the secondary office markets will also be seen as prime availability drops.

While vacancy will trend downwards from 2013 to 2014, the lows of 2007 are still some way off

In an environment of slow demand, occupiers will continue to lead in lease negotiations, often looking for more flexibility in their lease terms and for shorter tie-in periods, while others will

VACANCY

NEW SUPPLY AS A PERCENTAGE OF INVENTORY (2012-2014) Amsterdam Barcelona Brussels Dublin Frankfurt Lisbon London Luxembourg Madrid Milan Munich Paris Stockholm Zurich Bucharest Budapest Istanbul Moscow Prague Warsaw 0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Supply as Percentage Inventory

SOURCE: CUSHMAN & WAKEFIELD RESEARCH

GLOBAL OFFICE FORECAST 2013-2014

A Cushman & Wakefield Research Publication

EUROPE: CLASS A/PRIME RENTS 2012

2013

2014

TREND

STABLE

DOWN

MARKET OUTLOOK

LOCAL US$D/ LOCAL US$D/ LOCAL US$D/ 2012-2014 CURRENCY SqFt/Yr CURRENCY SqFt/Yr CURRENCY SqFt/Yr

WESTERN EUROPE Amsterdam (€/SqM/Yr)

Barcelona (€/SqM/Mo)

Brussels (€/SqM/Yr)

Dublin (€/SqM/Yr)

Frankfurt (€/SqM/Mo)

Lisbon (€/SqM/Mo)

London (£/SqFt/Yr)

360

43.58

360

43.58

360

43.58

Active demand is largely focused on accessible, high-quality space and as a result prime rents are expected to hold firm over the next two years, although supported by incentives.

17.75

25.79

17.00

24.70

17.20

24.99

Subdued demand will see prime rents come under renewed downward pressure. However, as the effects of new economic policies and reforms take hold, there may be some stabilization further ahead.

285

34.50

295

35.71

300

36.32

Demand levels are expected to hold largely stable, but the supply of high-quality space will begin to ease, supporting positive rental growth until 2014. However, incentives will remain a key element to any deal.

307

37.17

323

39.10

350

42.37

Headline rents are expected to creep up slowly over the next 24 months, although with rent-free periods part of the overall package. This is more in anticipation of positive growth and underlines the lack of quality supply coming on stream, which provides a ‘first mover advantage’.

34.00

49.39

34.50

50.12

35.50

51.57

Rents are expected to rise moderately over the next couple of years in the Banking District, Frankfurt’s top submarket, as prime space is relatively tight. Elsewhere, the relatively high vacancy rate, along with incentives on offer, will suppress rental increases, despite improved demand conditions.

18.50

26.88

18.00

26.15

18.50

26.88

Prime rental values are likely to come under increasing downward pressure against a fragile economy as demand continues to falter, despite the generous incentives on offer. Competition for tenants will likely intensify as unemployment remains a pertinent issue for the Portuguese market.

168 112.50

180

124

199

105

Against a backdrop of still weak but slowly improving economic sentiment, prime rents are forecast to remain under upward pressure during 2012-2014, due to both improving levels of take-up from domestic and international occupiers and the relatively limited supply of quality stock coming to the market.

40.00

58.11

41.50

60.29

44.00

63.92

Amid strong occupational demand and a dwindling supply of grade A stock, prime rental growth is forecast to be relatively robust in 2013, averaging 3.8%. Rental growth in 2014 is expected to gain further momentum at around 6% as available new supply continues to decline.

25.00

36.32

24.45

35.52

24.90

36.17

Although demand is largely driven by cost-reduction strategies and lease renegotiations, the highquality buildings in the core submarkets continue to retain tenant interest and sometimes see offmarket rents achieved. As a result, prime rents are anticipated to keep afloat amidst falling demand.

510

61.74

500

60.53

510

61.74

Prime rents are expected to remain under downward pressure throughout 2013 as cost-conscious tenants continue to seek out lower cost office space. Business sentiment is expected to slowly improve in 2014, which should contribute to some marginal rental growth thereafter.

31.50

45.76

32.00

46.49

33.00

47.94

Prime rents in Munich are expected to remain relatively static, albeit with an upward bias. Although take-up is expected to remain at a high level and the economic picture anticipated to brighten, increases in prime rent will not be rapid, as incentives will decrease first.

800

96.85

820

99.27

830

100

With the CBD lacking quality supply and limited new development, prime rents will see positive growth despite a slowing in demand from the traditional banking and insurance sectors. Occupiers are tending to renegotiate their leases and this is keeping pressure on the vacancy rate.

Stockholm (SKr/SqM/Yr)

4,600

65.01

4,625

65.36

4,700

66.42

Prime rents remain under upward pressure, supported by relatively healthy market fundamentals with robust demand continuing to meet limited new quality supply. Prime rental growth in 2013, albeit moderate, is expected to reach similar levels to 2012 before picking up in 2014.

Zurich (SFr/SqM/Yr)

760

65.52

765

65.95

785

67.67

Despite some occupiers moving from the city center towards the more cost-efficient peripheral areas, prime rents in the CBD will come under upward pressure due to the lack of available grade A supply and a limited development pipeline. Incentives will also be scaled back as demand slowly improves.

Luxembourg (€/SqM/Mo)

Madrid (€/SqM/Mo)

Milan (€/SqM/Yr)

Munich (€/SqM/Mo)

Paris (€/SqM/Yr)

CENTRAL AND EASTERN EUROPE Bucharest (€/SqM/Mo)

19.00

27.60

19.20

27.89

19.70

28.62

Over the short-term prime rents will stabilize, although they will continue to be supported by incentive packages including rent-free periods and contributions to fit-out costs. As demand picks up and quality space is slowly absorbed, incentives will be withdrawn and prime rents will see positive growth.

Budapest (€/SqM/Mo)

21.00

30.51

21.00

30.51

21.50

31.23

Despite the high vacancy rate in Budapest, prime space is registering high levels of occupancy and thus rents in the CBD submarket, in particular, are expected to remain stable. In some instances incentive packages are offered as landlords bid to attract and/or retain occupiers.

Istanbul (US$/SqM/Mo)

44.00

49.05

45.00

50.17

47.00

52.40

A lack of quality space and increasing demand from international occupiers is supporting positive growth in prime rents in Istanbul’s CBD. Well-connected, newly emerging submarkets are also seeing rents strengthen albeit from a lower base.

Moscow (US$/SqM/Yr)

1,150

107

1,200

111

1,285

119

Prague (€/SqM/Mo)

21.00

30.51

20.00

29.05

19.50

28.33

While tenants seek quality space, a combination of weak demand, large amounts of speculative development and a pipeline of accessible ‘permitted’ projects will exert significant downward pressure on headline and effective rents.

Warsaw (€/SqM/Mo)

26.50

38.50

26.50

38.50

26.80

38.93

Over the course of 2013, despite positive sentiment and new requirements, prime rents will remain stable supported by incentives. As grade A supply dries up rents will come slightly under upward pressure and this will be coupled with a reduction in incentives offered by landlords of quality space.

Against limited new completions in Moscow’s CBD and a low grade A vacancy rate, prime rents are expected to increase. Occupiers of prime space are less ‘rent sensitive’ but this part of the market remains thin and landlords of secondary space need to lower rents in order to compete.

SOURCE FOR EXCHANGE RATES FOR EUROPE: FINANCIAL TIMES | 19 OCT 2012, CLOSING PRICE

DECEMBER 2012

A Cushman & Wakefield Research Publication

EUROPE: VACANCY AND ABSORPTION OVERALL VACANCY % 2012

2013

ABSORPTION AS % INVENTORY

TREND 2012-2014

TREND

STABLE

DOWN

MARKET OUTLOOK

2014

2012

2013

2014

Amsterdam

15.8 16.7 15.6

1.1

0.0

2.4

Vacancy rates will remain largely unchanged over the next two years fluctuating between 15% and 17%. While grade A vacancy is relatively low, Amsterdam has traditionally been characterized by oversupply and this will remain a key concern over the medium term.

Barcelona

14.2 13.8 13.7

-1.1

1.2

0.3

With persisting concerns about economic growth in the Spanish market, business sentiment will be muted. While some space will be taken off the market, absorption will be weak and vacancy is expected to remain in double digits over the next 24 months, although on a marginal downward trend.

Brussels

10.3

9.0

0.5

0.9

1.2

Domestic government bodies and those related to the European Union are likely to lead the way in terms of active requirements over the next 12 to 18 months. This, coupled with a slim development pipeline and the withdrawal of some older buildings, will put downward pressure on overall vacancy.

Dublin

17.7 15.5 13.8

2.5

2.1

The occupational market in Dublin is seeing reasonable activity albeit from a low base and this is eroding some oversupply as no new space is delivered. Up to a third of the oversupply is obsolete space and while vacancy is high, it is declining.

Frankfurt

13.2 12.7 12.1

1.3

2.7

1.8

Vacancy rates are expected to fall in the next two years. This is the result of increased take-up from a more optimistic economic environment and limited speculative new supply. However the challenge of structural vacancy will remain.

Lisbon

13.5 13.8 13.9

-1.6

0.6

Although take-up has been steady, it is at a low level. Activity continues to be largely driven by consolidation and other cost-reducing tactics rather than by new requirements. Consequently, Portugal’s already high vacancy rate will rise further as occupiers release excess space.

WESTERN EUROPE

9.9

6.0

6.5

5.9

0.9

1.4

1.3

While demand for prime London office space has increased year on year – particularly from the media & technology sectors – occupiers remain cautious and lettings are slow to complete. An improvement in take-up is anticipated from 2013 as confidence returns combined with an upturn in lease events.

Luxembourg 6.0

5.6

5.2

3.0

2.4

2.1

Leasing activity held up well in 2012, led by strong demand from the banking and financial sectors. This trend is forecast to continue in the short term and, with a limited supply of new stock coming to the market, vacancy rates are expected to continue falling in 2013 and 2014.

Madrid

11.7 13.8 13.9

0.7

-1.7

0.3

Spain’s uncertain economy and relocation costs have suppressed much of the occupier demand, particularly in the secondary markets. As a result, despite any mild interest still prevalent in the CBD, overall vacancy is expected to continue rising.

Milan

15.0 14.6 13.2

0.8

0.5

1.5

The office leasing market is tenant-led with cost control and consolidation key issues in the decision-making process. Activity will remain focused on well-connected grade A stock. While grade B availability is rising as surplus space is released, overall vacancy will decline, due to lower construction levels.

London

Munich

8.9

8.5

7.9

0.1

1.3

1.4

With a diverse economy and relatively low unemployment, Munich is robust and is expected to see demand for office space increase over the next couple of years. As a result of this and continued subdued speculative construction, vacancy rates are expected to decrease.

Paris

7.4

7.6

7.4

0.5

1.1

0.6

The overall vacancy rate will stabilize between 2012 and 2014, with subdued economic conditions weighing negatively on tenant demand but completion levels falling. There is a disparity however between submarkets, with the CBD faring better than more peripheral areas where recent development has taken place.

Stockholm

9.6 10.4

9.8

2.1

-0.7

1.1

Limited development in central Stockholm has curbed any upward movement in vacancy, supported by relatively healthy demand levels. However, with more development in the peripheral areas and consolidation still high on occupier agendas, overall vacancy will rise in 2013, before falling back in 2014.

Zurich

4.5

4.9

0.8

1.2

0.6

While take-up levels are relatively healthy, consolidation is driving the bulk of activity, resulting in availability increasing as occupiers release excess space. However, vacancy will remain low and well below the European average between 2012-2014.

4.8

CENTRAL AND EASTERN EUROPE Bucharest

14.4 12.0

9.8

-0.5

7.5

4.4

Despite a scaling back in speculative development, occupier activity is having a limited effect on eroding the overhang of supply as they continue to shed excess space. Sluggish economic prospects will continue to deter occupiers, although with key lease expirations in 2013 vacancy will begin to decline.

Budapest

26.3 24.6 22.9

-2.3

2.1

2.7

With speculative developments limited, vacancy will edge down over the next 24 months, although remain in double digits as the challenges of structural vacancy are dealt with. The decline in availability will be somewhat supported by the increase in take-up, although this continues to be driven by space rationalization.

7.3

7.7

7.8

7.6

Against anticipated robust economic growth and an expanding market, shelved requirements will be reactivated in 2013 and 2014, and new demand will be registered. This pick-up in activity will help to absorb existing supply with key opportunities going forward likely to be by securing pre-let space in new developments.

Moscow

11.5 10.5 10.5

4.8

3.9

Despite a slowdown in the economy, demand for new, quality space is relatively strong, especially for well-located properties, which has driven grade A vacancy well below the city average. The overall rate is expected to fall, but remain relatively high as speculative developments are completed.

Prague

12.3 12.2 12.4

2.7

2.6

Demand will remain relatively stable, underpinned by current occupiers ‘churning’ space as they look to upgrade in a pressurized rental market. This, coupled with a scaling back in speculative development, will see the vacancy rate remain relatively stable between now and 2014.

Warsaw

9.3 12.1 12.1

3.1

3.9

3.7

Although occupier demand is expected to remain healthy, declining economic growth prospects and a large amount of speculative supply coming online in 2013 will see the vacancy rate rise in some submarkets.

Istanbul

8.8

8.6

GLOBAL OFFICE FORECAST 2013-2014

A Cushman & Wakefield Research Publication

EUROPE: NEW SUPPLY (000s) 2012 LOCAL MEASURE

2013 LOCAL MEASURE

2014 SF

LOCAL MEASURE

TREND

TREND 2012-2014

STABLE

DOWN

MARKET OUTLOOK

WESTERN EUROPE 38

411

774

100

1,076

New supply levels will rise over the next two years, but will require partial or full pre-lets in order to secure development financing. Furthermore, as a result of the high vacancy rate, a number of buildings are being redeveloped away from office use and, more often than not, converted to residential.

Barcelona (Sq Meter)

596

205

Most space completed in 2012 was pre-let. A number of speculative projects are due for completion in 2013. For 2014, most development has been put on hold until demand regains momentum.

Brussels (Sq Meter)

124

1,340

753

646

The development pipeline is trending downwards linked to the lack of available capital and relatively subdued occupier demand. The larger schemes that have broken ground are already under pre-let agreements, with limited speculative space due to be completed in the short-term helping to rebalance the market.

Dublin (Sq Meter)

161

Linked to the economic difficulties, the development pipeline has ground to a halt with no new space expected until 2014 at the earliest. Even then, development financing will still be difficult to obtain amidst continued tight lending criteria and a strong preference for pre-lets.

Frankfurt (Sq Meter)

1,016

313

3,369

187

2,010

Lisbon (Sq Meter)

132

523

371

2,465

4,189

2,801

1,031

797

646

New supply is expected to be just under 96,000 sq.m in 2012, which marks a significant decline on recent years. Tight financing conditions continue to limit speculative development, with expected completions in 2013 and 2014 noticeably weaker. Pre-lets are expected to remain a common feature of the market.

Madrid (Sq Meter)

217

2,333

646

431

Supply levels have remained largely unchanged in 2012 due to the lack of new speculative construction. However, while the majority of new supply due for 2013 is pre-let, a slight lift in second-hand supply is anticipated once some corporate relocations are completed.

Milan (Sq Meter)

173

1,863

237

During 2012 a significant amount of new supply was delivered. There will be lower levels of new completions in 2013-14 as developers are cautious and postponing delivery times. Approximately 200,000 sq.m of space already under construction has been put on hold waiting for potential tenants to register interest.

Munich (Sq Meter)

118

1,270

208

2,239

190

2,045

The decreasing vacancy rate will prompt new construction over the next two years as developers look to take advantage of market conditions. Current expectations are for completion rates in 2013 to be higher than 2012 before declining slightly again in 2014.

Paris (Sq Meter)

502

5,405

755

8,125

236

2,542

Restrictive financing and waning demand saw relatively low levels of completions in 2012, although they will pick up in 2013 before falling again in 2014. Paris’ CBD is seeing a mix of new construction and refurbishments although at a low level, totalling less that 120,000 sq.m between 2012 and 2014.

Stockholm (Sq Meter)

157

1,688

215

673

Amidst ongoing financing restrictions, most active developments have pre-lets in place. The bulk of construction (70%) is in Solna and Kungsholmen, although with some proposed schemes in the pipeline, there is potential for construction activity to rise.

888

1,031

538

With strict planning regulations in place, any construction activity in the city centre will be the redevelopment/ refurbishment of older space. Short to medium term, the bulk of construction is in the Zurich North and Airport areas, although new deliveries are expected to be absorbed by unsatisfied active requirements.

Amsterdam (Sq Meter)

London (Sq Feet) Luxembourg (Sq Meter)

Zurich (Sq Meter)

Despite a relatively large amount of space due for completion in 2013, the majority has already been pre-let and will not adversely affect the vacancy rate. There will be moderate levels of new supply delivered in 2014. Subdued demand has caused development to ease. Speculative development has largely come to a halt as lenders are wary of financing schemes that have no pre-lets in place. However, a series of planned refurbishments in the CBD should bolster supply levels in the medium term. Current supply is still tight, with a notable shortage of space being seen in some submarkets and size bands, but space under construction is picking up. New supply is forecast to rise next year and into 2014 when a number of new city tower developments will complete.

CENTRAL AND EASTERN EUROPE Bucharest (Sq Meter)

106

1,142

117

1,255

570

Lower levels of speculative development between 2012 and 2014 will help to re-establish a better balance between supply and demand, especially as improving take-up levels will begin to erode the overhang of space, coupled with the fact that some more obsolete buildings are removed from stock.

Budapest (Sq Meter)

214

167

371

New supply stabilizes in 2013 before rising in 2014, potentially supporting a more positive outlook. However, securing development financing is difficult with lenders looking for pre-let commitments. Additionally, a number of schemes have been postponed until more robust fundamentals take hold.

Istanbul (Sq Meter)

226

2,431

245

2,637

220

2,368

A lack of development sites in the CBD and prohibitive development costs has ‘encouraged’ both developers and cost-conscious occupiers to look at schemes in Istanbul’s more peripheral area, which will, over time, potentially become more attractive as the investment into infrastructure begins to pay dividends.

Moscow (Sq Meter)

526

5,662

450

4,844

600

6,458

The next 24 months will see some fluctuation in the level of new construction, although the bulk is in the peripheral areas of the city. However, some submarkets, for example Belorussky and Frunzensky, are experiencing extremely low availability, indicating a strong deficit of quality space in these areas.

Prague (Sq Meter)

100

1,073

921

100

1,076

New supply is at 2011 levels and likely to remain relatively high due to ongoing construction and a large pipeline in the main office districts. In the face of weakened demand, this is the main reason why the balance of market power swung to favor tenants during the crisis.

Warsaw (Sq Meter)

236

2,545

305

3,287

179

1,931

A large proportion of the pipeline is being built on a speculative basis and is located outside Warsaw’s CBD, potentially offering cheaper, quality accommodation. Within the CBD, development activity is a mixture of refurbishments and new construction.

GLOBAL OFFICE FORECAST 2013-2014

A Cushman & Wakefield Research Publication

Cushman & Wakefield is known as a global industry knowledge leader. Through the delivery of timely, accurate, high-quality research reports on the leading trends, markets around the world, forecasts and business issues, we aim to assist our clients in making property decisions that meet their objectives and enhance their competitive position. Cushman & Wakefield also provides customized studies to meet the specific information needs of owners, occupiers and investors.

Published by Cushman & Wakefield Research For more information, contact:

CONTRIBUTORS AMERICAS

EUROPE

ASIA PACIFIC

Maria T. Sicola Executive Managing Director, Research Americas San Francisco, CA Lic. # 00616335 T +1 (415) 773-3542 E maria.sicola@cushwake.com

David Hutchings Partner, Head of the European Research Group London, UK T +44 (0) 20 7152 5029 E david.hutchings@eur.cushwake.com

Sigrid Zialcita Managing Director, Research Asia Pacific Singapore T +(65) 6232 0875 E sigrid.zialcita@ap.cushwake.com

Joanna Tano Associate Partner, European Research London, UK T +44 (0) 20 7152 5944 E joanna.tano@eur.cushwake.com

Lai Wyai Kay Manager, Research Services Asia Pacific T +(65) 6232 0864 E wyaikay.lai@ap.cushwake.com

Alex Milojevic Senior Research Consultant, European Research London, UK T +44 (0) 20 7152 5936 E alex.milojevic@eur.cushwake.com

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Jeff West Senior Analyst, Research Portland, OR T +1 (503) 279-1772 E jeff.west@cushwake.com Paula F. Munger Regional Director, Research Mid-Atlantic Southeast Tysons Corner, VA T +1 (703) 847 2785 E paula.munger@cushwake.com Caroline Green Regional Director, Capital Markets Northern California Research San Fransisco, CA Lic. # 00616335 T +1 (415) 658-3677 E caroline.green@cushwake.com Shannon A. Sommer Elliott Director, Research Services Denver, CO T +1 (303) 813-6442 E shannon.elliott@cushwake.com

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